Nansi Mishra 0:44

Hi Victor, welcome to the Neon Show.

Victor Senapaty 0:46

Hi Nansi, thanks for having me here.

Nansi Mishra 0:48

So Victor let’s just start this conversation with a number that you think tells story of Propelld better than anything.

Victor Senapaty 0:58

So Nansi, I would talk about two numbers. The first number is we have now given more loans in a financial year than what SBI would have given in just six years of history. SBI has been there around since ages now. It is the largest lender in education financing in terms of number of students. We give loans to about one and a half lakh students every year which matches SBI. You can assume the scale that we have and with a team which is I don’t know 150th of an SBI without a branches sort of model. That’s a number I am really proud of. Second number which I would want to talk about is 70% of these students that we give loans to come from a tier 3 city. So tier 3 which is traditionally seen as a risky segment by lending institutions has been our forte though. And in fact, if I may add, you would want to add a third number in this too. Nothing more. It’s just one more number which is our NPAs are at a 1% level. If you compare it with traditional players, it’s 1/10th. It’s seen a history of ups and downs through COVID, stress tested through a tech crisis, demonetization. So we are really proud of that.

Nansi Mishra 2:46

And that too when you are serving to tier 3 students.

Victor Senapaty 2:50

Yes. In fact, that’s been a strength for us is what I would say. What we have understood over time is education is a good asset class. It’s a great asset class. These are parents and students who are invested in making their lives better. So logically, it makes sense that people should be repaying back. They should be getting some value. If you are able to make that assessment really well, you should be really good. That’s been our takeaway too. So somebody who does their job well in terms of underwriting these institutes or the courses, the end users and the students will have a very low NPA. It will behave like a secured product is what I understood.

Nansi Mishra 3:43

But everything happens in future. So how do you predict that this student will be able to pay?

Victor Senapaty 3:54

As we have learned traditionally, the past is a good reflection of the future. It’s about doing that and just getting deeper in there. So what we do both philosophically and tactically in our underwriting and our thought process of risk is get deep into the institutes and really understand what is the quality of service that they provide and how is that going to look like in the future too. Is the student going to get a value out of this? The value need not be just a job. The value could be even something as simple as being able to complete his course in time. That’s a very basic expectation that somebody has once they enroll their kids in a coaching institute as an example. So you can imagine that we are building a Cibil score or a CRISIL score for institutes and for courses. In fact, I would correct it. It’s not for institutes and courses. It’s for end-use and of course, institutes and courses are a part of it. It’s for a particular end-use.

Nansi Mishra 5:09

So lending to students through institutions or without institutions work with Propelld or like how do banks also operate in this space if you can simplify.

Victor Senapaty 5:22

Sure. So the core idea here is a couple of things. One is an end-use control. So why is a education loan different from say a personal loan? A personal loan can be used for an end-use which is value destroying. That’s when mostly people have a difficulty in repaying back. Say somebody uses it for gambling and loses money or speculative trading. If you use it for a ROI generating use case, most people will repay back. You are not questioning the intent of the people. Intent changes with what happens really. Now with education, the end-use definitely is ROI accretive. But how do you structure that product so that it actually goes to the institute for an end-use? That matters. The other thing is let’s say when banks typically look at end-use, it’s a more simplistic thought process of if these are top 100 institutes, the students will definitely get an end-use. That is much more easier to say. But how do you progress that thought into say the 100th to the 500th institute or say the 1000th institute?

Nansi Mishra 6:53

Like that’s why most of the banks prefer giving loan to IITs. Even the loan limit is also higher for them.

Victor Senapaty 7:03

Yes, you are absolutely right. So when it comes to IITs or IIMs or ISBs of the world, Narsee Monjee’s, S.P. Jains the world. It’s relying on the idea that whatever the loan amount is, students will get a job which justifies paying that EMI back and 100% of the time these students will get placed. These students are cream of the country. They will have a high moral value in repaying it back to. So it’s a lot more easier decision to take. But once you start going down that funnel and if you look at the top 100 institutes, they only cater to hardly 1% of the students. What about the remaining 99%? Are they all going to places where they do not get any ROI at all? I would say no. Everybody has a certain ROI in mind. If you go to an IIT, your benchmark is probably a 10 lakh, 12 lakh starting job. If you go to a lower tier institute, say a second tier engineering institute, your benchmark is getting a 5 lakh job. Now in that benchmark and the costs are adjusted accordingly. Now would you be able to give a loan there if you understand which of these institutes or which of these courses are doing their job well and whether those students are going to get the value that they have come in for? That’s basically the question here. So what we have done really well is measure employability of students, measure end-uses from institutes and courses and be able to underwrite the end-use. We have seen that that has turned out really well in terms of both ability and intent of repaying back a loan and our NPAs have stayed at a 1% level whereas if you compare it with banks, once they move out from IITs and go towards other institutes, tier 2, tier 3 institutes, their NPAs shoot up to close to around a 10% sort of level.

Nansi Mishra 9:17

And to improve that number, they focus on tier 1 colleges only, right?

Victor Senapaty 9:23

Correct. So it works in two ways. A lot of the loans go in tier 1 colleges where there are almost 0 NPAs and then a bunch of loans on tier 2, tier 3 where they cannot deny because education is also a sensitive category, politically sensitive category, it’s a priority sector lending category. They have to fill up their priority sector targets also. There are significant NPAs in those particular segments. For us, the market is in the tier 2, tier 3 segments which are good enough for us to lend to, highly under-penetrated right now and sort of opportunities which a traditional you know, banks would not be able to cater to and you know, we get better over time in underwriting these institutes and courses.

Nansi Mishra 10:21

And Victor, you started Propelld in 2016.

Victor Senapaty 10:24

Yeah.

Nansi Mishra 10:25

And this is 2026. So you will be completing 10 years this year, right? So 10 years building at the intersection of FinTech, EdTech, right? Yeah. What are the surprises that you had?

Victor Senapaty 10:43

Let me think this.

Nansi Mishra 10:45

Because education, India is obsessed about, right? Education is one, you know, education is something that help you change your orbit. Like I have come from a village and all my family members are into farming. My mother fought with my father because she wanted to move to a tier 3 city so that me and my brother could get good education. So my father took up a job in tier 3 city and we moved as family. So education, we truly believe in education. We feel that if we don’t have anything else and if we are good in studies that can literally take us to places, right?

Victor Senapaty 11:27

Yes.

Nansi Mishra 11:28

But still the numbers are different, right? Like if we just talk about the loans that the kind of loans are granted for home, for vehicle versus the number of loans that are granted for education. There is huge gap.

Victor Senapaty 11:44

Yeah. So education is categorized as a PSL, priority sector lending. And there are targets for that. But overall, I agree with you. Say, for example, housing category or vehicle loan category, 50% would be 50% penetrated in terms, as in 50% of the spends would be financed with loans. So it’s highly commoditized. Now, education is the penetration for education spends would be close to 5%, as in 5% of loans in overall education as spends, which is close to around 100 billion dollars. A lot of people are changing that. Some of our peers like Awans and Credila have done some wonderful work in study abroad segment where it’s the same story, but students going abroad. They have done that and they have proven that particular market too, that they proven that thesis which you sort of spoke about. And that has actually been our very strong core learning too, that if you are able to find the right institutes, right courses and right students, and they are doing things which are really productive, then your money is going to come back. It’s a great business to do. That has been our core learning, which, of course, has taken a lot of misses, a lot of trial and error, a lot of burning our hands. But that’s been a philosophy that we began with. And fortunately for us, that philosophy has stuck through. In general, we have seen that philosophy work around. If the institutes are the right fit, they are doing their job really well, the courses are the right fit, they are not over selling those courses or over promising outcomes. The students are focused, the students and parents, the family is focused and they really want to do this and they are making the right choices in terms of education. They will get their value and you as somebody who has facilitated that entire process will have good fundamentals as a lending company too, great fundamentals as a lending company.

Nansi Mishra 14:14

So, why not banks are doing it?

Victor Senapaty 14:20

I think it’s just a question of focus and we exist as Propelld for the last 10 years to solve a hard problem and we are scratching the surface of it. With a post LLM world makes it feel like we are so much empowered now, but the learnings that we have had over the last few years are not transferable. These are ingrained deep philosophical sort of learnings and lot more tactical learnings as well. For a bank, it doesn’t matter, it doesn’t. The retail book itself for lending is fraction of the wholesale book. Within the retail book, something which has been going on and secured products are a lot more better, it’s been going on. So, as an example, in FY25, SBI would have given out some 2.25 trillion rupees of loans for home loan, whereas for education, it would be close to 0.15 trillion. So, 15X difference. So, who in there would want to really focus on this and really crack this and really sort of do this? That’s a question.

Nansi Mishra 15:41

And this is SBI, we didn’t even talk about the other banks.

Victor Senapaty 15:45

Yeah. So, education loan is primarily, so there are primarily in terms of PSU banks, there is SBI, which does say one and a half lakh students every year, gives loans to one and a half lakh students every year. There is Bank of Baroda and Canara Bank, which do close to 50,000 loans. Everybody else then comes later, probably your PNB and few other players, Bank of Maharashtra and so on. But hardly five, six banks and SBI is 50% of that wallet share. You take Bank of Baroda, Canara Bank, PNB, so five banks would cater to 90% of that. Then you have NBFCs, there is Credila and Avans, which do abroad and they’ve done a great job in abroad from the place that study abroad education used to be financed. That was at a similar space, say, 15 years back. But you know, look at that market now, it’s probably 15-20% penetrated. So, 15-20% of study abroad spends happens through financing, which means a lot more people can now dream of going abroad and having a better life. So, this will also happen. Bajaj had done that with consumer durables. Of course, it takes a lot more time. The hard problem, it takes a lot of being at it sort of thing. And so, it is happening now. I think over the next five years, you will see a lot more students dreaming a lot more as well. And going towards courses, we get messages for these as well. So, from students, which are very heartening. I wanted to do a B.Tech, but I could only afford a B.E. So, the gap is say around 3 lakh or 4 lakh and you guys do something about it. So, that’s when if we get in, we figure out that student, the institute, figure out what happens and if we are able to solve it for them and give that personal loan, it just makes our day.

Nansi Mishra 17:51

And India is producing more graduates than ever, right?

Victor Senapaty 17:57

Of course.

Nansi Mishra 17:57

And very few get jobs. So, what’s the data that you get to see through Propelld that most of us don’t have any idea about?

Victor Senapaty 18:08

So, I think some of these headline numbers makes it feel like the engineering graduates do not get a job. I don’t think that’s really true though. In our experience, we have some limited experience in that. I would qualify that. We have worked majorly with institutes which are tier 2 and some tier 3 institutes. Tier 1 categories are your typical IITs and NITs and say the top 70, 80 odd engineering and MBA institutes.

Nansi Mishra 18:47

How many we would have in tier 1? How many in tier 2?

Victor Senapaty 18:53

Tier 1 would be say close to around 70 or 80 institutes. Tier 2 would be close to around 300, 250 to 300 institutes broadly and tier 3 would be say around 1000, 1500 somewhere around that and tier 4 and 5 would be enormous sort of institutes. I am not even going there. So, we have had experience of working directly on the ground with tier 2 and tier 3 institutes and what we see there is that placements happen. Students are motivated. These are good students. They do something with their lives. It’s not that tier 2 and tier 3 student pass outs are the ones who end up being unemployable sort of youth. Either they get placed through the institute and typically we would say close to around 50, 60% sort of placement happening through the institute and anywhere from 4 lakh to 6 lakh sort of salaries, CTCs which are good to begin with and then these students figure out their own careers. Some of them move and get trained into say certification programs or some finishing schools before starting up small time sort of jobs. Some of them get into sales, but if you look at these students say one year after having passed out, 80 to 90% of them would be in a job and would be doing something or another, would be earning money. So, we don’t see that as a problem. Of course, when it comes to tier 4 or tier 5 sort of institutes, reports of course say that they are highly unemployable. I don’t have a qualified answer for that to be honest right now. But I think students figure out something or the other to do. If not anything, they get into small time sort of sales roles.

Nansi Mishra 21:09

There is also one data point that only 8% of graduate students land jobs that match their education background.

Victor Senapaty 21:27

I don’t know how researched these numbers are. But yes, that’s something that we really get into. So, which is in terms of ROI, like what the fees are and in what time you get, what sort of income is such a big input to our model as well to understand what has what sort value to quantify value. Now, what we have started understanding over time is that lot of this value is also sort of at a bunch of places a lot of this value is straightforward. Say engineering, say MBA or tier 2 institutes, like I said tier 2, tier 3 category of institutes, category of courses, it’s very easy to sort of quantify. Some of this value is in terms of upward mobility in life, like a social upward mobility, which is very hard to quantify too, for which parents are willing to pay. Now, that’s a debate on whether that’s justified or not. But you can’t debate with a father who has saved for his daughter’s, say, small B.Tech education, because he believes that making his daughter a graduate will have, will unlock better opportunities for her in social life in terms of whom she marries and where she ends up settling down and what sort of life she ends up having. That’s a question for, that’s a debate. But people think that way. And I think that’s a fair way to think about it. I don’t, it’s very hard to quantify. I don’t think I’m sure the idea, like you mentioned, the idea of your parents coming in from a tier 3 place to a tier 2 city and doing everything that needs to be done. These are things which are way more long term understanding of things, long term understanding of the impact. It’s hard to quantify that. But the general feel is that education helps.

Nansi Mishra 24:00

Yeah, definitely. I’m sitting here all thanks to them.

Victor Senapaty 24:03

Yes.

Nansi Mishra 24:03

Talking to you.

Victor Senapaty 24:04

Yeah. No, same. We’ve had all similar stories. So, and we’ve seen that. And we get testimonials of that. We get many students reaching out to us for that. So, we definitely believe in that education story. And I think, I agree, education, India has a quality issue, but we feel it’s getting better, directionally getting better.

Nansi Mishra 24:34

So, you are saying that Propelld is targeting those 200, 250 tier 2 institutions and then tier 3. So, this number will increase only.

Victor Senapaty 24:45

Of course.

Nansi Mishra 24:46

Because we have few in tier 1, but there is no limit if you go to tier 3, tier 4 institutions, right?

Victor Senapaty 24:56

Absolutely, right. As in, we want to be the guys who invest in the future of the country. These students are the future of the country. And it’s like they are an input going into a processing engine. And after that, they are going to be an output, which is different altogether. We want to be there. And because we are a lending company, we have to be very careful with our risk and underwriting and understanding the segment too. It’s easier for us to do that from a tier 2 place. And then slowly we start taking some of these learnings, testing the waters in a tier 3, going deeper there. And that’s our overall strategy.

Nansi Mishra 25:38

Lending is a very difficult space. And you guys didn’t have any experience, at least in this domain, right? You come from FinTech finance background. And I remember you discussing this in one of your past interviews that when you were part of IIT Madras, right? You graduated from IIT Madras. And then you went to FMS to do your MBA in finance. And because you were interested in finance, then you joined a global bank and you kind of didn’t like your job because what you had in your head was not the kind of work you were doing. But I think what you’re doing now in Propelld is exactly what you wanted to do.

Victor Senapaty 26:19

So, in general, of course, lending is building a real business. Most times, there’s a lot of unglamorous hard work. As an engineer, and you can imagine that, as an engineer, you love the intellectual problem statements, the fancy problem statements. In lending, a lot of the problem statements are used to be. In fact, the world has changed with a post LLM sort of world right now. They’re actually way more excited now. But a lot of the functions or things like liability raising, things like governance, reporting, investor relations, fundraising are pieces which are traditional, have been done in a certain way, compliance. So, you do it in that way. And because we have a great team which does that, which supports us for that. And in a post LLM world, it’s a lot more fun because you can play around with a lot of risk and credit models, a lot of distribution strategies, you can rethink.

Nansi Mishra 27:39

Can you simplify this part? I’m not able to understand like how post LLM world changes things in this sector.

Victor Senapaty 27:46

Oh, it changes like crazy. If I were a person starting an NBFC right now, I would start thinking of a NBFC, sort of a 10% NBFC or a 50% NBFC instead of a 400 member team that we have right now. Even that is crazy efficient, as I told you, as I sort of mentioned earlier. So, we have a 400 member team doing one and a half lakh sort of loans. But as in every facet of, a lot of facets of lending are being, can be very AI first. You have an opportunity of building those playbooks. So, say for example, the core heart of lending, which is around underwriting students, which is credit and risk. Now, these models will only become better over time. So, we’ve, a weekend project helps us build the crystal score of institutes in a much more efficient, much more scalable way where one run can give us that score for the entire universe of institutes in the country and not do it in an older fashioned way of getting data and spending a lot of time having analysts there. You have, at one point, 100 analysts probably working for you if you want it, which means you can go deeper into that crisil score of institutes and courses. You can look at way more signals. So, when you underwrite cases too, a lot of cases, the gap between, so earlier the, every time it’s always above a particular level are strong approvals, which go through straightforward process, then there are definite rejects and then there’s a manual arm. And slowly that arm, that zone is sort of coming down and a lot more decisions, better decisions, a lot more faster decisions, which means that overall, the value that you can bring to the consumer in terms of being really fast, being able to give decisions as early as possible, help them in understanding where the stand is a lot more faster, what used to take, you know, three days earlier now is instant. In terms of journey, it’s not an e-comm journey, it’s a compliance focused, very hard journey that somebody goes through.

Nansi Mishra 30:37

Usually, how much time it takes for you guys to identify one institution and onboard the institution and then eventually disburse the loan?

Victor Senapaty 30:46

Earlier, for example, a new institute that comes up, which is not in our database would take us the analyst’s bandwidth to figure that out and that means probably, you know, two, three days, assuming there are bottlenecks, it really does not take two, three days, it’s probably hours, but then there’s a value to the bottlenecks that are there, bunch of things, you’ll pick it up after a point. Now, it’s a real-time thing. So, you don’t need an analyst, it’s a, you know, few seconds to figure about that institute and put a score and being able to sort of give a loan. So, it fundamentally changes how you look at things. It fundamentally changes the distribution, the entire fulfillment journey also changes like crazy. So, you know, being good from a, you know, having understood lending from a techie’s point of view, from an engineer’s point of view, we had already engineered the process to be, you know, probably 5x to 10x more efficient than what other lenders typically do. And that’s been a necessity-driven thing because we are not catering to an average ticket size of 30 lakh, 40 lakh. Our average ticket size would be, say, in a bunch of segments, 1 lakh, say, in higher education, say, close to around 4 lakh, 5 lakh, but in general, very low as compared to a 30 lakh. So, you know, we were already operating at crazy efficiency, but now it just makes, you know, that efficiency way more exponential.

Nansi Mishra 32:22

So, even with the ticket size of 1 lakh, an average is 1 lakh, 1.25 lakh, Propelld is profitable. So, how do you see the next few years with LLMs and, you know, ticket size, I assume, would be the same only, right?

Victor Senapaty 32:37

No. So, you know, of course, the ticket size depends on the distribution. Earlier, you know…

Nansi Mishra 32:42

Now more institutions can be onboarded.

Victor Senapaty 32:44

Yes. Earlier, we used to do also a lot more shorter tenor products, smaller ticket sizes, like coaching loans, you know, certification loans. Over time, as we started building our capabilities in both risk and in raising debt, you know, on the liability side, we built our own NBFC. We have now started getting lines from banks to add rates, which, you know, sort of great rates, close to around sort of 10% sort of levels. So, you know, 10, nine and a half percent sort of level. Now, you know, we have that ability to go into higher ticket sizes. So, say, 10 lakh loans, 20 lakh loans, even 40 lakh, say, you know, post-grad, MBBS sort of loans. So, as that mix sort of changes, you know, our ticket sizes are going to increase. But even without that, our efficiencies are going up, you know, year on year. So, I will give you an example. In FY25, our net interest income was 75 crores. In FY26, we are doing 150 crores. So, doubled our revenues. In FY27, we will grow probably 80%. So, 222 to 30 crores of revenues. You know, what our costs have been in FY25, if our costs, like total costs were, say, close to 70 crores. In FY26, it was 77, which is like 10% increase. 26 to 27 is another 10% increase. So, while our revenues are going up, say, you know, 80%, 100%, our costs are being growing up at, say, 10% sort of level. Where we project us to be at FY30, you know, where we want to go for a public listing will be close to around, say, around 6,000 crores sort of assets under management. We are right now at close to 1,500 crores AUM. AUM is also growing, say, 50 to 60% year on year. Our OPEX, honestly, we feel that we will be at some 2% sort of level. And that is me honestly underselling it. As there is actually a, you know, we see that it can actually be even lower and that is crazy. Like, if I compare it with some of the peers in abroad educational lending or even scaled in BFCs at close to around 30,000 crore AUM scale, which is 5X of where we will be at FY30, their OPEX would be close to 3.5%, 3% sort of level. So, us being at a scale of 5X lesser, we are even more, we will be way more efficient. And that is already showing and that is not taking into account LLMs, you know, exponential power. This is just, you know, engineering, which was pre-LLM sort of world. It is just focus and make things way more efficient. So, we have a team which has close to 10 people and they do close to around, sorry, my bad, 20 people and do close to around 1000 crores of disbursal in a year. Not all teams are that way, but there is one team, there is a blueprint for that. So, there is one person doing 50 crores of disbursal, which is close to 5 crores in a month. It is unheard of. So, in a post-LLM world, it is going to be even more crazy is what we feel. So, distribution, fulfillment, risk and credit.

Nansi Mishra 36:34

This is just so interesting and powerful at the same time that we keep talking about how AI is going to take everyone’s job. And this is, and how you are, you know, using AI, making the processes so efficient within Propelld that more students would be getting more loans and eventually, you know, getting better jobs.

Victor Senapaty 36:59

So, its applications go beyond just, you know, being way more efficient. It is about being better in terms of underwriting risk and underwriting credit. It is, you know, we are leaving money on the table at some places. We are not able to service the people, all the students that we would like to. We are not able to do it on time. We are not able to be as efficient. So, you know, the risk and underwriting models becoming deeper and becoming significant are a huge advantage. And then on the distribution side too, as in the way we imagine this is, why are we imagining lending as a, you know, the way it has always been imagined, which is, I want to buy a home. Now I come to somebody to get a loan. Why not think of lending, you know, people do not care about just the budget part of it, right? As in people care about the eventual outcomes. Are there, can there be a, you know, ecosystem enabler which helps people piece together outcomes across the entire piece of the journey, help them take the right decisions and, you know, enable those outcomes. So, I start from 12th, I start thinking about, you know, which career broadly, which careers sort of excite me, which directions I should go to, which institutes I should choose, which can give me a shot at my career, which courses, which institutes have the right fit for me, have the right ROI for me, move towards, you know, the right sort of corporates and build a career out. And through these entire pieces, lending is an enabler at the end of the day. What you ideally want is, you want to empower people for outcomes that they want and ending is just one piece of the puzzle. So, it goes beyond just that is what we feel. But yes, in a base level, definitely a hyper-efficient, hyper-personalized, you know, a different beast of a lending company, you know, a different level of personalized and deep verticalized credit and risk engines, you know, highly hyper-efficient, that is a level, that is one level. And then the other level definitely is more of a ecosystem helper or an ecosystem enabler. So, yeah, we are definitely super excited.

Nansi Mishra 39:45

What are the most interesting courses?

Victor Senapaty 39:48

What are the most interesting courses? Look, interesting courses, no, okay. So, I would define them as value courses, as in the courses which actually build sort of real value. Now, when we go to undergrads, and the definition of which gives value is also changing over time. So, in a post-LLM world, we feel MBAs will definitely have a lot more value, especially engineers doing MBA, as an MBA is lot more philosophical thinking, understanding about business. And when you combine broadly, when you start doing two things together, you as a director of a, you know, multiple agent level world, you are supposed to be directors now, you are supposed to play the orchestra as in be the orchestrator. So, you being that will have value. So, an MBA who builds a business who builds a gut instinct, who has an engineering background who can play around with, you know, LLMs will have a lot more value. We’ve seen a lot of these tier two, tier three institutes focus a lot more on, you know, AI labs and so on. I know, there has been, you know, a bunch of things have, you know, you know, a lot of news on, you know, universities showing some things which are not there. But, you know, in my head, that’s still value as in if you have something for the students to interact with, students are naturally curious, you will start doing something around it. So, you know, the tier two, tier three institute, Btech people, Btech students will get a lot more exposure, tier one, of course, they will have a lot more value as well. I think there’ll be a lot of value. I think interestingly, my bet is also on a lot of good arts graduates being a lot more valuable now. You know, now you’re coding and LLMs, you know, coding is going to be more sort of commoditized. So, I think the real problem is for standalone courses or, you know, students who do one particular thing, say, for example, engineering and from very tier four or tier five sort of places, which are not going to get into an AI sort of the same world, not going to prepare them for that. They are going to have an issue. But otherwise, as in, we keep seeing that, right, as in a post LLM world, people who are doing a lot of manual work, which cannot be replaced are actually better. But say the lower end coders are now, you know, they’ll have to upskill. So, you know, positives and negatives. But that’s what, you know, broadly I see. Doctors are not going anywhere. You know, you only get better. It’s, you know, I think, yeah, that’s the overall, that’s my overall take on the space.

Nansi Mishra 43:18

And how has the space evolved in the last 10 years?

Victor Senapaty 43:23

It’s been a roller coaster evolution. When we started off, of course, we were very new to financial services and how to build a lending company. We did not understand.

Nansi Mishra 43:39

We can also talk about Milton Friedman’s research paper. That’s where everything started, right?

Victor Senapaty 43:47

Yeah, yeah, yeah. Of course, that’s where everything started.

Nansi Mishra 43:50

So, like, it was Birgesh or Vibhu. When you talked about that paper, how you both perceived and then the next 10 years.

Victor Senapaty 44:03

So, it’s been quite a journey as in, so from Milton Friedman’s paper, I think there was a genesis of the idea to, you know, pitching about it and talking to initial few investors, getting that confidence that, yes, this is a large opportunity to be pursued. This is something which is of value. And then getting to places where, you know, understanding about lending, understanding then about how that business model of lending has to be set up, each and everything as in, you know, the evolution has been in each and every function, I should say, right from the overall vision to, you know, what is the meaning of liabilities.

Nansi Mishra 45:00

What was the vision when you started?

Victor Senapaty 45:04

Very simple. You know, we love education. We love education. We would love to do something where students do not leave out a good option because they don’t have money. Good students don’t leave out a good option because they don’t have money. That part still remains. Now, we have gone to that place where we think about, can we do more for students? Can we help them in ways which are beyond just lending which helps them in their overall outcome? Lending is just one part of the puzzle. But what everybody really wants is to get a certain outcome. That outcome is a career, that outcome is an ROI, that outcome is employability, you know, etc., etc. So, how do we help people along that way? That’s been from a vision point of view. But, you know, a lot of the functions that run right now at Propelld were things we had zero idea about. So, something like risk and credit, you know, which, you know, when we initially started, it was something about us talking to students and, you know, sort of taking a gut call versus right now where we have sophisticated models and AI models. It’s been quite a progression from liability raise where we had zero idea of, you know, concepts of a term loan or, you know, sort of PTC, DEA, rating, and so on to be at a place right now where we have securitized products, we have our own NBFC license, we have banks as lenders, we have our own rating now, we’ve rated ourselves. It’s been some journey. Yeah, each of these functions, I should say, from collections to distribution to everything.

Nansi Mishra 47:02

There was a lot to figure out, right, in the first two years. And so, before IQ and Stellaris invested, how many investors did you talk to? How was that journey for you guys?

Victor Senapaty 47:16

That’s been a journey too, as in, you know.

Nansi Mishra 47:19

Because I think for the last few startups, you didn’t raise any money.

Victor Senapaty 47:22

Last few, no.

Nansi Mishra 47:24

This was the first time you raised venture.

Victor Senapaty 47:26

Yes, this is the first time we raised venture. We’ve spoken to close to 100 investors probably during that time. So, yeah, both during the IQ and Stellaris time and even before that as well, together, we would have spoken to 100.

Nansi Mishra 47:43

And out of 100, these two guys invested.

Victor Senapaty 47:48

Yes, there was, you know, IAN as our early investor before IQ and Stellaris. But yeah.

Nansi Mishra 47:56

And how much was the round size?

Victor Senapaty 47:58

Very little from, but 2 crores, maybe, if I’m right for IAN and close to 2 million for IQ and Stellaris together.

Nansi Mishra 48:07

Together.

Victor Senapaty 48:09

You know, if I remember correctly.

Nansi Mishra 48:11

And this was 2017 or 18?

Victor Senapaty 48:15

I think somewhere around, you know, the IQ and Stellaris round should have been somewhere around 18, if I’m not wrong, 18 or 19. Yeah, something like that.

Nansi Mishra 48:25

So two years, it was bootstrap. Or the IAM round, IAM was part of the same round, right?

Victor Senapaty 48:32

No, it was an earlier round. We were running on that. But yeah, we’ve always run things very efficiently. So, yeah.

Nansi Mishra 48:43

A very interesting journey.

Victor Senapaty 48:44

Yes. It’s been some journey. And of course, founders, my founders being school friends from class six with, you know, like our parents know each other. If I go to go home to Bhubaneswar, I’ll be meeting, you know, both sets of, no, all the three sets of parents, of course, my parents as well. But yeah, that’s a, I don’t think I would have been able to do this as well, or we would have been able to do this as well if not for these guys.

Nansi Mishra 49:17

But how disagreements are resolved when friends are co-founders.

Victor Senapaty 49:23

Over food. So the good thing for us, we like the same food, we like the same things. We know each other’s, you know, choices, likes. So all we have to do is just, you know, after disagreements.

Nansi Mishra 49:38

But it doesn’t get personal because they know almost everything about you, right? Or there’s any fear that what if they leave? Because there are times when you know that you can’t do it without them. And with them also, it’s difficult. My husband is my co-founder. So coming from that.

Victor Senapaty 50:02

I can imagine. But no, so it does get personal, but it doesn’t stay personal. Yeah. Because we just know each other so well. All we have to do is, if it becomes too hard, we will just have to go for a small trip to Hampi, just the three of us or somewhere like that. Just the three of us, not talk about work, talk about everything else under the sun, you know, life and things get sorted.

Nansi Mishra 50:35

Is there any routine also among you guys that maybe a weekly meeting or?

Victor Senapaty 50:45

You know, this is very core to us. So this is like a daily thing in terms of, so I think we are in, we would be in conversation as in, you know, me with Brijesh, me with Bibu, Bibu with Brijesh almost daily. As in we would walk into each other’s room, spend time with them, call each other for lunch, you know, call each other for going down to have a coffee or to have a juice. So, you know, go for a walk. So these sort of things are very natural for us. We don’t have to put them in a ritual, you know. So that happens very, very naturally for us. So even while say we are in different flows, we are sitting in different flows, I’ll finish a call, I’ll call Bibu, let’s go down, we’ll just go take a walk. We will just, so it’s very easy and natural for us actually.

Nansi Mishra 51:41

And Victor, you guys are building at the intersection of Edtech, FinTech. What’s that one common mistake that you see all the founders in FinTech making? And then we can cover Edtech also.

Victor Senapaty 51:57

Sure. But I would sort of clarify a little bit. So I think you’re right to a certain degree. In fact, you know, you’re right to that degree. It’s a intersection of Edtech and FinTech. A lot of the work is majorly FinTech though. FinTech. Right. And, you know, say for example, you know, distribution is at one segment, is in the education segment. Understanding of that segment being deeper with greater risk is a Edtech thing more, but it comes with principles of FinTech.

Nansi Mishra 52:31

FinTech.

Victor Senapaty 52:32

But having said that, I think one of the pieces which we have done really, really well and, you know, a lot of, I see people making that mistake and this is all thanks to Bibu, who comes with a very fundamental approach. I’ll actually cover two things, you know, who comes with a very fundamental approach is have very, you know, clear idea and very clear, you know, picture of what our biggest metric is. For us, our biggest metric is our NPA rates, is our, you know, it’s a reflection of our credit underwriting and risk underwriting capability. Everything else comes below it. Growth comes below it. You know, unit economics comes below it. First piece is NPAs because credit losses have different, have a, you know, high order effect. Once your credit losses start coming in, it’s very hard to come back as a company, as a lending company. Your liabilities, you’re not able to raise liabilities. Your unit economics goes out and, you know, you just cannot make a comeback. So, our, you know, the principle that we operate with is NPAs are rank one, unit economics is rank two, growth is rank three. So, you know, and that’s actually worked well for us.

Nansi Mishra 54:15

Thank you so much, Victor, for spending time with me. I was really excited for this conversation and this was really very insightful for me. I could understand the whole space and I’m really excited for the next coming years for you guys.

Victor Senapaty 54:32

So are we. It’s a fun time to be in. You know, as a founder, it feels like you have superpowers now.

Nansi Mishra 54:42

Yeah. Yeah. Thank you and all the best for the journey ahead.

Victor Senapaty 54:46

Thank you. Thanks for having me.